We all know that Ethereum is a highly ambitious cryptocurrency and blockchain project.
Ethereum wants to be the world’s computer, and it is no joke. Moreover, based on the new technology of blockchain it is already in unchartered territories.
As of now, Ethereum is the second most valuable cryptocurrency by marketcap, and it has been there for a long time. Of course, in between, there was a fuss about Ethereum taking over Bitcoin, but so far Ethereum has grappled with its own problems.
Ethereum blockchain is also capable of hosting ERC20 tokens which in themselves have become another vertical all together in the cryptosphere.
But with great ambitions comes great challenges !!
And Ethereum is no different as it is facing severe challenges in scaling its blockchain and to continue to be viable for its users and developers alike.
Due to this uncertainty, many Ethereum investors have sold their ETH a few months back. But there are optimists and contrarians too amongst these investors who don’t want to part away with their Ether.
But another reality is that these optimists are facing a liquidity crunch as their capital is stuck in Ethers.
Enter Ethereum loans.
WHAT ARE Ether (ETH) LOANS? & WHY TAKE IT?
Ether loans are nothing but crypto collateralized loans that you can get by keeping your ETH as collateral.
Through these types of loans, Ether holders can get the much-needed liquidity they are searching for without having to close their Ethereum position completely.
Moreover, these Ether loans are available to you in USD or EUR or in stablecoins which you can directly use to pay for your vacation, or mortgage bills or purchasing a car.
It gets better:
You get these Ether backed cash loans without going through stringent KYC checks or credit history audits. The only requirement is, you need to have sufficient Ether to keep as collateral.
That’s why to take an Ether loan is any day a better decision than selling your ETH !!
WHERE TO TAKE Ethereum (ETH) LOANS?
It’s 2019, and the hype of Decentralized finance is just getting started.
And crypto backed loans is the part of this hype cycle that I am talking about. So as of now, there are quite a few crypto lending programs that have started giving crypto backed loans to crypto holders.
Fortunately, Ethereum is famous enough, and there are some lending players that are accepting Ether as collateral to issue USD or EUR loans. Some of these players are:
- Celsius Network etc..
So through these platforms, Ethereum holders who aren’t willing to part away with their Ether can take cash loans against their ETH. And once they have repaid the borrowed amount these programs give your ETH back.
This is all good.
But now the question arises, how to go about it?
For this let’s see the example of Nexo in the next section.
HOW TO TAKE Ethereum (ETH) LOANS?
As I shared previously with you, Nexo is one of the prominent crypto lending services that provides loans for Ethereum.
To get started with Nexo you just need to register on Nexo using your email ID and then complete their basic verification by providing minimal personal information.
Once you are done with this and approved, you can directly deposit your Ether to Nexo wallet. These Ethers are stored in offline multi-signature wallets of Nexo.
After your deposit is confirmed over the blockchain, you will be issued a loan in your chosen fiat or stablecoin currency according to the agreed LTV ratio.
But who decides how much loan amount to give against particular collateral?
Well, the loan limit is dynamically determined through the Nexo’s Oracle algorithms, depending on the current and historical volatility and market liquidity of the particular assets.
So depending upon the asset that you have deposited, the LTV ratio is determined. This LTV at Nexo varies from 20% to 50%. For example,
Depending on the type of assets you deposit, the loan-to-value (LTV) ratio ranges from 20% to 50%. Example: If you stake $10,000 worth of ETH, you will be able to withdraw an instant loan of approximately $5,000, i.e an LTV of ~50%. If you place a mix of assets, the LTV ratio will be determined proportionately.
As of now Nexo is serving customers in more than 200 jurisdictions and is providing loans in 45+ fiat currencies. So if you are one of those ETH holders who doesn’t want to part away with their ETH but still wants liquidity, you should look no further than Nexo.
So that’s all from our side in this introductory guide on Ethereum loans. If you are someone who wants to take a loan against Litecoin, read this guide on Litecoin loans!!
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Hey there! I am Sudhir Khatwani, an IT bank professional turned into a cryptocurrency and blockchain proponent from Pune, India. Cryptocurrencies and blockchain will change human life in inconceivable ways and I am here to empower people to understand this new ecosystem so that they can use it for their benefit. You will find me reading about cryptonomics and eating if I am not doing anything else.